New focus for BT Ignite - Financial Perspectives

It's all change far BT Ignite. Instead of targeting the SME market, BT Ignite is under instruction from new BT Group CEO Ben Verwaayen to exclusively woo large European corporate customers with managed data services. And if BT Ignite doesn't breakeven by March 2003, Verwaayen has indicated he will close down the company.

To help meet its targets, BT Ignite looks set to ramp up its corporate outsourcing portfolio. "The addressable hosting market in Europe is worth US$1 bn [[square]1.15 bn] and is growing at 40 per cent," claims Perses Sethna, VP of products and marketing at BT Ignite content hosting.

Although Sethna admits the outsourcing sell has been made more difficult by decreasing IT budgets, he reckons the long-term advantages are becoming more apparent. "The decision-making process [for outsourcing hosting] is maturing," he says. "For instance, the decision is not the responsibility of just one IT manager anymore but a multifunctional group of people within the company.

The shift in attitude is reflected by the changing scope of SLAs (service level agreements). "Rather than simple guarantees on service delivery, customers today expect a service level relationship with their outsourcer providing them with a dedicated service manager and on-going support management," observes Sethna.

Research conducted on behalf of BT Ignite by RS Consulting, an independent IT specialist research company, indicates that in addition to direct benefits -- like cost-savings -- there are several indirect benefits of outsourcing, such as improved business efficiency and higher customer satisfaction.

However, the research reveals these benefits are hard for companies to quantify, which might make it difficult for vice providers to convince businesses to go down the outsourcing route.

To address this problem, Sethna points to the 'cost of ownership model' which BT Ignite implements to help companies appreciate the indirect benefits they can gain through outsourcing hosting. BT Ignite can offer a customised overview of what specific qualitative benefits -- direct and indirect -- the company will gain. "The investment and benefits that companies enjoy through outsourcing stimulates growth of the market," argues Sethna. For example, he expects customers who outsource hosting to be able to get a ROI (return on investment) within 12 months.

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